Observations and Insight
World Of Opportunity Chicago 2014: Tim McDermott (Promo)
Our MarketsWiki World of Opportunity Summer Intern Education Series in Chicago is quickly approaching. Tim McDermott, CEO of Nadex, will be discussing his career path in the financial industry and how his experiences have helped shape his career today. For more information on the event and how to register, click here.
VIX Eases Down From Thursday’s Aggressive Spike
Ali Berri – Benzinga
The S&P VIX, which measures volatility in the S&P stock index, spikes up by 32.18 percent from the news Thursday of a Malaysian commercial aircraft being destroyed near the bored of Ukraine and Russia.
Stocks recoup most of prior day’s drop; Google lifts tech
Kate Gibson – CNBC
U.S. stocks rose on Friday, with the S&P 500 rebounding after its largest drop in three months, as investors drew cheer from the latest round of corporate earnings and found solace in the view that geopolitical tensions appeared contained.
Malaysia Airlines crash triggers risk-off reaction
William L. Watts – MarketWatch
Whether the crash of a Malaysia Airlines jet carrying 295 passengers in eastern Ukraine was a conflict-related travesty as well as a human tragedy will determine its long-term impact on financial markets.
Investors immediately sold stocks in the aftermath of the crash, sending U.S. indexes sharply ower and adding to a drop in European equities. U.S. Treasurys and gold jumped as traders sought out assets viewed as havens in times of turmoil.
VIX spike rope-a-dope
Andrew Wilkinson – Futures Magazine
If financial market participants acted more like that famous Honey Badger, fewer investors might be suffering from seller’s remorse on Friday. The cobra-scoffing, honeycomb-raiding Honey Badger, famous for snacking no matter whether its prey bites, injects venom or stings the heck out of its attacker, just eats what it wants, when it wants, and pays little attention to the risk. The day’s 17% decline in the CBOE Volatility Index (VIX), currently at 12.11, appears to be a victory for couldn’t-give-a damn-what-you throw-at-me risk managers who react less to spikes in option premiums resulting from the latest geopolitical event.
About That Big VIX Spike
Steven Russolillo – WSJ
Judging by the stock market’s volatility indicator, Thursday was one of the more fearful days on Wall Street over the past few decades.
Options traders rushed for protective positions after a Malaysia Airlines 3786.KU -11.11% plane was shot down and after Israel sent troops into Gaza. Stocks slumped, while gold and Treasurys rallied as investors flocked to safe-haven investments.
The CBOE’s Volatility Index, better known as the VIX, surged 32% to 14.54, its biggest one-day gain in 15 months.
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The VIX: Wall Street Gospel, or a Piece of the Puzzle?
Adam Warner – Schaeffer’s Investment Research
Stop watching the CBOE Volatility Index (VIX)! Or said an article on Nasdaq.com a few days ago:
Videocast: Volatility plunges on rally
The market’s roadmap to stability — or selloff
Adam Shell – USA Today
The stock market is showing signs of stabilizing today after a rocky Thursday. Wall Street pros lay out the path back to stability — and what can go wrong on the geopolitical front.
In late afternoon trading the Dow Jones industrial average is up more than 125 points and looking to erase a big chunk of Thursday’s 161-point drop. It appears that investors’ initial kneejerk reaction to the downed Malaysia Airlines jetliner and Israel’s military foray into the Gaza Strip was an overreaction. Investors are back to worrying about U.S. corporate earnings (which are coming in strong) and now underplaying the potential economic fallout due to political troubles overseas.
CME Group throws down gauntlet in race to run gold fix
Clara Denina and Jan Harvey – Reuters
The Chicago Mercantile Exchange (CME) said on Thursday it would be happy to administer, with Thomson Reuters, the global price benchmark for gold known as the “fix”, a day after banks effectively called time on the current arrangement.
The century-old gold fix is a standard price for the metal that banks set twice a day over the telephone. It is based on transactions between their clients such as central banks and mining companies.
Regulation and Enforcement
Exclusive: SEC targets 10 firms in high frequency trading probe – SEC document
John McCrank – Reuters
The U.S. Securities and Exchange Commission has been seeking information on 10 registered broker dealers as part of an ongoing investigation into high-frequency trading strategies, according to an internal SEC document reviewed by Reuters.
The regulator told its staff in late March that it was interested in seeing any tips, complaints, or referrals that they receive concerning the brokers and high frequency trading.
Trade reporting fines on the horizon
Jon Watkins – The Trade
Regulators are set to clamp down on widespread trade reporting breaches across Europe as a six-month grace period since the rules were introduced expires, according to industry sources.
Issues surrounding unique trade identifiers (UTIs), legal entity identifiers (LEIs) and the complexity of the 85 fields required by regulators have plagued the process from the outset.
As a result, only around 1% of trades have been matched, compromising the objective of increasing transparency in the markets with unusable data.
How Russian Hackers Stole the Nasdaq
Michael Riley – BloombergBusinessweek
In October 2010, a Federal Bureau of Investigation system monitoring U.S. Internet traffic picked up an alert. The signal was coming from Nasdaq (NDAQ). It looked like malware had snuck into the company’s central servers. There were indications that the intruder was not a kid somewhere, but the intelligence agency of another country. More troubling still: When the U.S. experts got a better look at the malware, they realized it was attack code, designed to cause damage.
3 Ways To Prep For The End Of Low Volatility
Wilfred Hahn – ETF.com
It’s summer, and critical thinking is not easy. In fact, it’s never easy. Yet the languid summer days can lull one into complacency, even with the troubling turns of events in the Ukraine and Israel.
I’m referring to something far deeper in a macroeconomic sense than the breakout of hostilities in the world’s hot spots. I’m talking about preparing for the end of the unprecedented environment that has prevailed since stocks fell by almost 50 percent six years ago. Yes, financial markets have retraced all of that drawdown and then some, but investors should not be fooled into believing normality has returned.